J.P. Morgan’s “Down 30 in 30” trading rule | AAL stock | Tariff woes

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one travel stock in particular has been particularly hard hit lately. American Airlines’ 

AAL

+5.02%

 plunge Tuesday briefly triggered J.P. Morgan’s “Down 30 in 30” trading rule. Although the shares recovered to close 3.8% down for the day and 21% down over the past month, at one point, the stock had lost 30% of its value in fewer than 30 days.

“This level of speed and severity has, in the past, overwhelmingly been followed by significant potential upside over the next 180 trading days,” analyst Jamie Baker said in a note Tuesday. “Never a guarantee of future performance, but this rule has served us well for decades,” he added.

American Airlines stock has triggered the rule 22 times since 1998, J.P. Morgan analysts said, with returns of 50% or more in the following 180 days on 12 occasions. Only once did it fail to result in gains. The factors behind those falls include the Ebola virus, oil prices, global trade fears, and interest rates.

“It’s always something. But the catalysts don’t matter to us. For purposes of this analysis, it’s solely about the correction,” Baker said. “For risk-tolerant accounts, past precedent strongly suggests accumulating positions in Overweight-rated American.”

United Airlines 

UAL

+3.85%

 isn’t far from meeting the rule as well, falling 21% over the past 30 days, the analysts said. A fall to $76.30 by March 21 would meet the threshold; the stock currently trades at around $86.